Apple's chief executive Tim Cook addressed two stock related issues that have been topics of interest to company investors: the payment of dividends and a possible stock split, while speaking to shareholders this morning.

Among other questions Cook addressed in the meeting, one shareholder referenced Apple's nearly $100 billion cash pile but asked that Apple not issue a regular common dividend as many pundits have suggested.

Instead, he suggested Apple invest more of its resources into obtaining content for iTunes, matching and improving upon the TV and movie streaming offerings of Netflix and Hulu Plus, building a subscription or a la cart offering for all content, rather than attempting to buy an existing content provider service.

He also suggested that if Apple decided to issue a dividend, it should limit it to preferred shareholders, as a regular dividend would likely be subject to new taxes on the horizon and could have the effect of scaring off regular investors, ultimately using Apple's cash less effectively than the company could itself through direct investment.

Cook responded very much the same as Jobs historically often had, with prepared comments on the general subject before addressing the shareholder's specific comments. Cook noted Apple now has more cash than it needs to run its business, after noting that Apple already spends billions on infrastructure, building out retail, and buying small companies and making IP purchases.

"We spend a lot, but we still have a lot," Cook said, reiterating a comment he previously made in a conference hosted by Goldman Sachs earlier this month.

Cook then addressed the specifics of the question, noting that Apple has lots of content, "most everything" in the music business and around 40,000 movies and 70,000 TV shows, but that it "was not there for the profit," noting that the iTunes Store is targeted to run at break even as a convenience to users, not as a business.

Apple "makes its month from hardware," Cook stated. He specifically added that cable deals were a "complex piece," adding that the economics behind a la carte deals for content providers were "too powerful for the people there," noting that "the reality of an a la carte system like you've described is not likely."

Phil Schiller also noted that Apple aimed to strike a balance between parties, with iTunes' music offerings seeking find a workable middle ground between customers and artists, but noting that that balance is more difficult to find in the cable business.

Another shareholder addressed the question of a possible stock split, asking Cook to outline the pros and cons of such a possibility rather that actually recommending a split or not.

Cook stated that Apple's board has been considering both dividends and stock splits very carefully, seeking to do what was best for its shareholders. In examining other companies that had done a stock split, Cook noted that they found that in most cases "a stock split does nothing."

A stock split may cause an initial pop in share prices, thought by some to be related to making a stock seem more affordable to small investors, but over time that price jump returns back to where it was, Cook said.

A possible negative result of a split, Cook pointed out, is that the split simply results in more stocks being issued, resulting in more transactional costs for some buyers, with no real change in value.

I feel the higher transaction costs associated with a stock split would be insignificant--not even worth mentioning. A split would make it easier for small investors to jump in at the price they want and jump out at the price they want. A high share price really only benefits medium- to large investors, and very little at that.

I feel the higher transaction costs associated with a stock split would be insignificant--not even worth mentioning. A split would make it easier for small investors to jump in at the price they want and jump out at the price they want. A high share price really only benefits medium- to large investors, and very little at that.

I disagree. Even at $500 per share, the minimum investment is $500. So a split is only really catering to people who have less than $500 to invest, and that's a very small audience.

I feel the higher transaction costs associated with a stock split would be insignificant--not even worth mentioning. A split would make it easier for small investors to jump in at the price they want and jump out at the price they want. A high share price really only benefits medium- to large investors, and very little at that.

Apple shouldn't bother with shareholders who want to 'jump in....and jump out'. Moreover, it is just as easy for me to sell/buy 2 shares of Apple as it is 20 (assuming a 10:1 split, which would be a massive split), if I was after ~$1000. Also, consider that 70+% of Apple shareholders are institutions, and are far more likely to be the marginal investor (i.e., the ones that jump in and out).

Cook is right: stock splits do nothing.

Tim Cook is gay, believes in climate change, and cares deeply about racial equality. Deal with it (and please spare us if you can't).

I have a hard time believing that they couldn't setup an a la carte system. However, I think that they should focus more on setting up a subscription service comparable to that offered by Amazon, Netflix, and Hulu Plus now. Oh, and for those of you who don't think that this is possible. Consider that for that $100 billion in cash they could come close to buying all four major networks.

That being said, I think that a better use of their money would be to purchase companies to bolster and strengthen their Siri interface. Perhaps buy Nuance or one of Nuance's competitors to strengthen the speech to text side of the service, or even better would be to bolster the actual AI part of Siri. A purchase of some of the more promising Siri alternatives could help shore up the talent and hopefully acquire some important IP.

Apple shouldn't bother with shareholders who want to 'jump in....and jump out'. Moreover, it is just as easy for me to sell/buy 2 shares of Apple as it is 20 (assuming a 10:1 split, which would be a massive split), if I was after ~$1000. Also, consider that 70+% of Apple shareholders are institutions, and are far more likely to be the marginal investor (i.e., the ones that jump in and out).

Cook is right: stock splits do nothing.

Agreed. Also, people who pop a big chunk of change for a single share are more likely to be interested in the long game than the short game. That reduces volatility, which is again good for long players. It becomes a self-fulfilling prophecy of sorts.

I disagree. Even at $500 per share, the minimum investment is $500. So a split is only really catering to people who have less than $500 to invest, and that's a very small audience.

Investors still almost always buy/sell in lots of 100. When buying/selling an "odd lot", it's more difficult to obtain the price one wants. That will tend to cost small investors real money--a far higher percentage of the total price than the extra fees associated with large stock purchases.

We can prove this to be the case by looking at stocks that are hundreds of thousands of dollars per share. It's easy to argue that a 2:1 split won't do much or that $500 is still within a decent range but what about $1000 or $10,000 per share? How many stocks are that high and why have Apple and other companies done stock splits in the past if there is no positive effect? Surely no one thinks that stock split comprehension is new.

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I have a hard time believing that they couldn't setup an a la carte system. However, I think that they should focus more on setting up a subscription service comparable to that offered by Amazon, Netflix, and Hulu Plus now. Oh, and for those of you who don't think that this is possible.

Apple could do whatever it wants if the power was in their hands. It's not. It belongs to the studios and the networks and they don't agree in the value of a la carte systems, removing DRM, bumping quality to 1080p at any bit rate, adding multi language audio/titles, lowering prices, lowering wait times, much less all of those things.

But it is good to see Tim publicly commenting that Apple isn't giving up on such things.

That posting only relates to the commissions/fees associated with trading in odd lots. I've been talking about the price one gets for the shares. It's more difficult to hit a specific or desired price when trading odd lots. Look at the active trading boards and you'll rarely see odd lot orders listed.

That posting only relates to the commissions/fees associated with trading in odd lots. I've been talking about the price one gets for the shares. It's more difficult to hit a specific or desired price when trading odd lots. Look at the active trading boards and you'll rarely see odd lot orders listed.

Let's say you want to buy AAPL today. It's trading right now at $516. Do you think a few cents per share on the price really matters? And on a highly liquid stock like AAPL, the spread is just cents.

Well, if dividends are only going to "preferred shareholders" then I want Cook to explain to me how I can become one. And if such is not possible, then it is clear we would have a situation where a small group of wealthy, elitest "preferred shareholders" are getting yet more on top of what they already have. In such a case, how is making that small group of wealthy elite even more rich via Dividends better for Apple or AAPL stock? It would seem only logical that a Common Stock Dividend (i.e., share the wealthy with everyone who owns AAPL) would be the best course of action, if a Dividend was deemed "good" at all.

If he gives me a 5:1 split and "but over time that price jump returns back to where it was" ... then I am 5 times better off! I'll live with that problem Tim.

Perhaps it's just a psychological limitation on my part but I have trouble believing that it would just as long for a stock at $500 to reach $2500 than it would 5x as much stock to reach $500 from $100. There a lot more factors at play than the simply division of the stock value.

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Perhaps it's just a psychological limitation on my part but I have trouble believing that it would just as long for a stock at $500 to reach $2500 than it would 5x as much stock to reach $500 from $100. There a lot more factors at play than the simply division of the stock value.

I'd agree with you. Is that the Law of Small NUmbers?

On re reading slowly I don't think he meant it would return to pre split price, rather the gain would evaporate. I'd disagree with Tim on that but that's another debate.

Heck if they are convinced a split won't have any effect then I'd say why not try it? I'd love 5x the stock to see if I'm right ... if not what is lost?

From Apple ][ - to new Mac Pro I've owned them all.Long on AAPL so biased"Google doesn't sell you anything, Google just sells you!"

That posting only relates to the commissions/fees associated with trading in odd lots. I've been talking about the price one gets for the shares. It's more difficult to hit a specific or desired price when trading odd lots. Look at the active trading boards and you'll rarely see odd lot orders listed.

What Scottrade fails to tell you on that page is that you can only specify "All Or None" on trades of 100 shares or more. So if you have an odd lot your trade may be made in multiple lots which can cost 1.5 or more times the $7 "flat rate."

Then there's the fact that options can only be traded in lots of 100. It makes it pretty hard for the small investor to use options to protect his stocks.

I personally would like to see the stock split (4 or 5 to 1.) I'd rather own 1000 shares than 200 just for convenience

Well, if dividends are only going to "preferred shareholders" then I want Cook to explain to me how I can become one. And if such is not possible, then it is clear we would have a situation where a small group of wealthy, elitest "preferred shareholders" are getting yet more on top of what they already have. In such a case, how is making that small group of wealthy elite even more rich via Dividends better for Apple or AAPL stock? It would seem only logical that a Common Stock Dividend (i.e., share the wealthy with everyone who owns AAPL) would be the best course of action, if a Dividend was deemed "good" at all.

Indeed. This would just be another instance of the one percenters gettin' while all us 99ers who have stood by the company, good times and bad, get nothing.

Well, if dividends are only going to "preferred shareholders" then I want Cook to explain to me how I can become one. And if such is not possible, then it is clear we would have a situation where a small group of wealthy, elitest "preferred shareholders" are getting yet more on top of what they already have. In such a case, how is making that small group of wealthy elite even more rich via Dividends better for Apple or AAPL stock? It would seem only logical that a Common Stock Dividend (i.e., share the wealthy with everyone who owns AAPL) would be the best course of action, if a Dividend was deemed "good" at all.

Preferred shares is a class of shares that is generally only held for the dividends that they generate (although, there may be some tax advantages for inter-corporate preferred holdings). That is how that category of security is characterized: http://www.investopedia.com/terms/p/preferredstock.asp

In other words, it is not come conspiracy against the common shareholder that preferreds get paid dividends. I don't know about Apple's preferreds specifically, but you can buy preferred shares in hundreds of companies, if you're so inclined. But just don't expect much of a price upside, if any, only dividends.

Tim Cook is gay, believes in climate change, and cares deeply about racial equality. Deal with it (and please spare us if you can't).

The day after Iraq invaded Kuwait the market went down 25%. Sooner or later, the Iran-Syria-Israel mashup will turn into a burning ship or two (not WWIII) and Iran will close the straits, and you can do the math on how much the market will correct when the news breaks the the next morning.

If I'm prescient I'll jump out the day before and jump back in two days later (I use these AAPL windfalls to supplement my 84 year old mothers carekeeping fund.)

Tim is right on, there is no need for a split or dividend, the ship is not broken and it doesn't need fixin. Kinda like Tim's successful strategy with the iPhone, iPad and MBA's, which is, if you're selling all you can make, why would you change things?

Perhaps it's just a psychological limitation on my part but I have trouble believing that it would just as long for a stock at $500 to reach $2500 than it would 5x as much stock to reach $500 from $100. There a lot more factors at play than the simply division of the stock value.

No, there aren't. You can choose not to believe it..... there's no law against it.

Tim Cook is gay, believes in climate change, and cares deeply about racial equality. Deal with it (and please spare us if you can't).

There are many people, like my mother, who have AAPL stock in their IRAs.

No, your mother is an exception.

According to the proxy statement issued in January, there were only 28,500 shareholders of record as of late December 2011. My guess is that a healthy chunk of those shareholders were actually Apple employees, via the company's Employee Stock Purchase Plan (ESPP), mostly owning small quantities since it's a percent of the employee's salary. So let's say that there are about 25,000 non-employee shareholders.

70% of the float is held by institutional investors, guys like Fidelity, Vanguard, BlackRock, State Street. According to Yahoo Finance, there are about 1700 institutional holders.

So really, there are probably about 23,300 non-employee retail shareholders. In a country of over 313 million people, that means one out every 13400 people is a direct shareholder of AAPL. That's not even 0.0075% of the population.

What Scottrade fails to tell you on that page is that you can only specify "All Or None" on trades of 100 shares or more. So if you have an odd lot your trade may be made in multiple lots which can cost 1.5 or more times the $7 "flat rate."

No. What Scotttrade is saying is this: Suppose you put in a buy order for 17 shares of AAPL and you get filled in three transactions--4 shares, 6 shares, and 7 shares. You will only pay $7 commission total, even though it was three transactions. The $7 will be split among the three.

Well, if dividends are only going to "preferred shareholders" then I want Cook to explain to me how I can become one. And if such is not possible, then it is clear we would have a situation where a small group of wealthy, elitest "preferred shareholders" are getting yet more on top of what they already have. In such a case, how is making that small group of wealthy elite even more rich via Dividends better for Apple or AAPL stock? It would seem only logical that a Common Stock Dividend (i.e., share the wealthy with everyone who owns AAPL) would be the best course of action, if a Dividend was deemed "good" at all.

There's usually two classes of stock to separate "preferred shareholders" from common stock holders. I own a number of preferreds (of other stocks). But I wasn't aware that there were two classes of Apple stock, so this statement surprises me.

Does that signal Apple is going to lower prices a bit, to put the squeeze on the competition?

That's one option they could use but it's a tricky one. If they lower their prices they have to make sure they can't be accused of using their dominate market position to unfairly reduce competition. They also need to factor in how lower prices will affect their profit margin and future growth to make sure they won't be put in a bad situation from charging too little. I think the best option with this new information is a buyback or one time dividend, with the latter being the most advantageous and most likely.

PS: Note that Cook say "now has more cash" yet people have been saying that since they had only a few billion in reserves.

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[A of this proves what I've always known from the beginning he who controls the content makes the rules ... and since apple controls 0 content, i have to think apples prospects look pretty grim.
Especially when you consider that future tech is likely to be even more content dependent than currently.

I think realistically apples only option is to invest in its own content just as others already are ...

I don't understand that. Apple makes great software when they want to. If they're genuinely not interested why not merge the current products into the Filemaker business. At least we might get more frequent updates and new versions. There is a lot of money to be made in software. The better the software the more it encourages people to buy the hardware to get the great software.

According to the proxy statement issued in January, there were only 28,500 shareholders of record as of late December 2011. My guess is that a healthy chunk of those shareholders were actually Apple employees, via the company's Employee Stock Purchase Plan (ESPP), mostly owning small quantities since it's a percent of the employee's salary. So let's say that there are about 25,000 non-employee shareholders.

70% of the float is held by institutional investors, guys like Fidelity, Vanguard, BlackRock, State Street. According to Yahoo Finance, there are about 1700 institutional holders.

So really, there are probably about 23,300 non-employee retail shareholders. In a country of over 313 million people, that means one out every 13400 people is a direct shareholder of AAPL. That's not even 0.0075% of the population.

You really spent time doing research to make that calculation?

Why stop at the US population? Anyone in the world can buy Apple shares. Why don't you go look up the exact current world population and tell what that percentage is.

Well, if dividends are only going to "preferred shareholders" then I want Cook to explain to me how I can become one. And if such is not possible, then it is clear we would have a situation where a small group of wealthy, elitest "preferred shareholders" are getting yet more on top of what they already have. In such a case, how is making that small group of wealthy elite even more rich via Dividends better for Apple or AAPL stock? It would seem only logical that a Common Stock Dividend (i.e., share the wealthy with everyone who owns AAPL) would be the best course of action, if a Dividend was deemed "good" at all.

This was the question/suggestion of a stockholder at the meeting. It was not the word of Tim Cook or anyone at Apple. Remain calm.